Up to 25% of iPhones may soon be made in India
- Apple is seeking to secure its supply chains by ramping up production in India to 25% of overall total.
- India offers a growing domestic market, a massive cheap workforce and remains the fastest growing major economy.
- The Indian government is welcoming investments in mobile phone manufacturing and accounts for 16% of global smartphone production.
- However, India's manufacturing sector is only 14% of its GDP and lacks crucial infrastructure for smooth goods movement.
- Apple aims to increase iPhone supply from 5% to 25% in India by 2025, but challenges remain to be seen.
India is emerging as a potential alternative for Apple as the company looks to secure its supply chains amid the Covid-19 pandemic and rising geopolitical tensions. India's Minister of Commerce and Industry, Piyush Goyal, recently announced that Apple is targeting to increase its production in India to 25% of its overall total. Currently, the company is manufacturing between 5% and 7% of its products in the South Asian nation.
Image credit: Redmond Pie
Apple has relied heavily on its vast manufacturing network in China for years, but its dependence on the country was disrupted last year due to Beijing's strict zero-Covid strategy. As a result, the company has redoubled its efforts to invest in India. According to Tarun Pathak, a research director at market research firm Counterpoint, "theoretically, it can be done, but it won't be happening overnight". India offers a growing domestic market, a massive and cheap labor force, and is expected to remain the fastest growing major economy in the world despite global recession fears.
Apple CEO Tim Cook stated that India is a "hugely exciting market" and a major focus for the company. The Indian government has implemented policies to attract investments in mobile phone manufacturing and Counterpoint's Pathak reported that India accounts for 16% of global smartphone production. Samsung, the world's top-selling smartphone brand, already makes a lot of its phones in India and has been diversifying away from China due to rising labor costs and local competition.
Image credit: Financial Times
However, manufacturing in India comes with its own set of challenges. The manufacturing sector constitutes only 14% of India's GDP, according to the World Bank, and the government has struggled to grow this figure. Shih, a manufacturing expert, pointed out that "India did not build infrastructure when they could," referring to highways, ports, and transport links that are crucial for the easy movement of goods. Apple is hoping to increase its global iPhone supply from 5% to 25% in India by 2025, but it remains to be seen if India can overcome the challenges and deliver on its potential.
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